VAT Matters – April 2026 – The Latest EU and Irish VAT Developments

In VAT Matters this month, David Duffy and Kathryn Hewitt discuss two Court of Justice of the European Union (“CJEU”) judgements and one UK Upper Tribunal decision which consider the definition of a voucher for VAT purposes.  

Two recent CJEU judgments and a UK Upper Tribunal decision have considered the definition of a “voucher” as well as the two different types of vouchers for VAT purposes. In broad terms, a single‑purpose voucher (“SPV”) is subject to VAT at the time of issue of the voucher, whereas a multi‑purpose voucher (“MPV”) is subject to VAT when it is redeemed in return for the underlying goods or services. The decisions discussed below consider whether particular arrangements fall within the VAT voucher regime at all and demonstrate that this is fact‑sensitive.

In Lyko Operations (C‑436/24), the CJEU held that customer loyalty points do not constitute “vouchers” within the meaning of Article 30a of the VAT Directive. Article 30a sets out two cumulative conditions for an instrument to qualify as a voucher:

1. There must be an obligation on the supplier to accept the instrument as consideration (or part‑consideration) for a supply of goods or services, and
2. The goods or services to be supplied, or the identities of their potential suppliers, must be indicated on the instrument itself or in related documentation.

Under the loyalty points programme in this case, customers received points for each purchase from the company, which could be redeemed for items in the company’s “points shop”. However, points were only redeemable in connection with a new purchase of product from the company’s ordinary range. The points could not be redeemed or purchased for money and were also not transferable. Products in the “points shop” were not available for a combination of points and payment in money.

When applying the above to the conditions of Article 30a, the Court accepted that the second condition was satisfied as the goods available in the “points shop” and the supplier were identifiable. However, the Court found that the first condition was not met. The loyalty points could only be redeemed in conjunction with a subsequent purchase, and as such did not give customers an independent right to obtain goods or services in exchange for the points alone. As a result, there was no obligation on the supplier to accept the points as consideration for a supply. Rather, the points only entitled customers who made a subsequent purchase to receive additional goods of low value. This made the points more akin to a discount, rather than a voucher.

In Žaidimų valiuta (C‑472/24), the CJEU considered the VAT treatment of transactions involving the purchase and resale of in‑game virtual currency (“Gold”) in exchange for traditional currencies. The Gold could only be used within an online video game, “Runescape”.

First, the Court held that transactions involving the exchange of real currency for in‑game Gold do not fall within the exemption in Article 135(1)(e) of the VAT Directive, which exempts transactions concerning currency, bank notes and coins used as legal tender, including non‑traditional currencies accepted as alternatives to legal tender. The Court reiterated that such non‑traditional currencies must only function as a means of payment. As the in‑game currency could be used only within the video game and had no payment function outside that context, the VAT exemption did not apply.

Secondly, the Court rejected the classification of the in‑game currency as a voucher, on the basis that a voucher must create a legal obligation for the supplier to accept it as payment (or part payment) for a future supply of goods or services. In contrast, in-game gold is not accepted as consideration for a future supply; it is itself the consumable benefit. Once acquired, it is used directly within the game and cannot be exchanged for another service or product.

Finally, the CJEU confirmed that the taxable amount was the full consideration received on sale of the in-game currency, in accordance with the general rule in Article 73 of the VAT Directive.

A similar approach was adopted by the UK Upper Tribunal in Lycamobile UK Ltd v HMRC [2026] UKUT 74, which considered whether VAT on prepaid mobile plan bundles was chargeable on sale or only as allowances were used. The bundles consisted of fixed‑price, fixed‑duration packages (typically 30 days) giving customers guaranteed access to specified quantities (or unlimited use) of call minutes, texts and/or data, with unused allowances expiring at the end of the period.

One of the arguments made by Lycamobile was that the bundles constituted MPVs under the voucher rules implemented into UK law from the VAT Directive, such that VAT would arise only on redemption (i.e. as allowances were used). The Upper Tribunal rejected that analysis, holding that the economic reality was that a single supply of telecommunications access was made at the point of sale for a fixed period, with subsequent usage merely representing the exercise of rights arising from that completed supply. The bundles were not “vouchers” from a VAT perspective, as there was no instrument accepted as consideration, customers did not present or redeem anything when making calls, sending texts or using data, they simply exercised contractual entitlements already acquired.

 David Duffy is an Indirect Tax Partner in KPMG. Kathryn Hewitt is an Indirect Tax Manager in KPMG.